Bosnia Wheat Price Study Finds Asymmetrical Bread Market Response

Wheat prices surged globally in 2021 and 2022, prompting consumers to expect bread and flour prices to follow suit. However, a study of Bosnia and Herzegovina's wheat-to-bread supply chain reveals that this is not always the case.

The research examined quarterly data spanning a decade, from 2014 to 2023, and found that consumer prices respond slowly, weakly, and sometimes asymmetrically to movements in raw wheat prices. The study focused on Bosnia and Herzegovina because it imports most of its wheat, with an average import dependency ratio of 83.24 percent during this period.

The researchers used cointegration analysis, error-correction models, impulse-response functions, and asymmetric specifications to understand how price signals propagate through the supply chain. They found that flour prices are the series most strongly associated with correcting deviations from the estimated long-run relationship, but not because of millers specifically.